THE VIRGINIAN-PILOT
Copyright (c) 1995, Landmark Communications, Inc.
DATE: Tuesday, September 19, 1995 TAG: 9509190067
SECTION: BUSINESS PAGE: D1 EDITION: FINAL
SOURCE: BY STEPHANIE STOUGHTON, STAFF WRITER
LENGTH: Medium: 59 lines
Discount chain Caldor Corp. filed for bankruptcy protection on Monday, leaving its expansion plans for Hampton Roads up in the air.
The Norwalk, Conn.-based retailer recently announced that it would open eight stores in this region. The discounter had chosen locations in Chesapeake, Norfolk, Portsmouth, Virginia Beach, Hampton and York County.
Last month, it broke ground at a shopping center in Chesapeake's Greenbrier section. But construction crews were told to stop working last week. It wasn't immediately clear whether the order came from Caldor, the development company or others involved in the project's financing.
Local real estate sources said Caldor has not indicated whether it will continue building in Chesapeake or break ground at other Hampton Roads sites.
And Caldor isn't saying.
``The company says it is premature at this stage to say what will happen to its development plans,'' a company spokesman said. ``They will be addressed in due course.''
Until recently, Caldor had experienced steady growth. The regional chain, founded in 1951 in a building loft, had seen its sales soar to $2.8 billion and its store count climb to 166.
During the summer, rumors about the company's viability began to grow. Caldor was facing increasing competition from bigger discounters like Wal-Mart and Kmart.
By August, the company's financial troubles were visible to Wall Street. That month, the company's sales took a dive and its share price began to plummet. Edgy suppliers, wondering whether the company had enough money to pay its bills, stopped deliveries.
``The whole system came down on us,'' Caldor Chairman Don Clarke told Bloomberg Business News. ``The vendor sees the stock falling, he goes to the credit manager. He tightens.
``It becomes a self-fulfilling prophecy.''
Caldor's problems are temporary, Clarke said in a news release.
``Over the short term, we have been confronted with a very difficult retail environment, characterized by fierce competition, weak sales, and exacerbated by other discount retailer bankruptcies,'' he said.
On Monday, Caldor filed for Chapter 11 bankruptcy protection in U.S. Bankruptcy Court in New York, becoming the latest regional chain to fall under the shadows of much larger discounters.
Caldor said it hopes to conduct business as usual while it implements a plan to reorganize and attract creditor support. Its stores and employees are not expected to be affected by the bankruptcy filing.
Caldor anticipates using all proceeds from its inventory and also has obtained a $250 million commitment from Chemical Bank to finance its debt. This funding, subject to court approval, will allow Caldor to meet future inventory needs and ensure prompt payment of new vendor invoices. MEMO: Bloomberg Business News contributed this report.
by CNB